I wish my family and friends talked to me about money more. This is what I’ve learned so far:
Sorry, this is a long one, TLDR:
Invest in the now: build cash savings for emergencies and peace of mind.
Invest in the future: before you invest in anything else, max out your 401k/TSP.
Real estate: Find a home that you can resell one day. Or one that makes sense in 30 years. You know, near hospitals and senior centers.
The things I’ve learned:
Cash: savings builds confidence. And options. The more you have, the more confident you’ll feel. Between government shutdowns, layoffs, and uncertain job markets, I made this year a cash building year. And if you put all your money in investments, you lose options in the short term.
TSP/401k: Put something away for later. If you have access to a 401k or a TSP, your only goal should be getting to a point of maxing that out. Am I maxing mine out? No. I never have. I’m not there yet. This year my goal was to build up a cash savings, which meant lower contributions. The bare minimum you should put in, should be whatever your company matches. Within your 401k are different funds. They mirror the stock market. I go 100% into the “C” fund, or whichever one mirrors the S&P 500. That’s the 500 largest companies in the Stock exchange. Other people will tell you to do something different.
Individual stocks: I’d stay away from these until you are maxed out on your 401k/TSP. I have some, but I wish that money was in my 401k. If somehow you have maxed out your 401k, then just read the news everyday. From as many publications as you can stand. Find out what industries people are talking about, and look for companies in those sectors. If I were maxed out on my 401k, I’d look at IPOs (private companies about to go public) that have potential to grow. Or small cap stocks that have potential to go large cap. But not before maxing out that 401k.
Real Estate: It took me a really long time to see a house as an asset verse a place where I want to spend my time. Actually I’m still not sure if I’m there yet. But, when you change this mindset, you’d start looking at houses in their proximity to shopping, hospitals, schools, nature, trails, coffee shops, etc. The worst house in the best neighborhood is still good advice. Thanks Chip and Jojo.
Credit cards: I try and pay mine off every month. Though in cash poor times I sometimes run behind.
Subscriptions: the devil. I just went through all my statements and found $200 a month I was wasting on things I forgot about.
Things I don’t know about yet:
Starting a business: I never believed in any one idea I had, more than any other.
Taxes: I haven’t quite figured out how to maximize my investments to not pay as much taxes. I do know if you try and play the game of individual stocks or a real estate and sell high before a year or two, you owe a ton of capital gains taxes. Don’t fall into that trap.
Trusts: half the houses in Tahoe are in a trust. I know this from having an onX pro trial for a week. I know it helps you protect your assets. I know you probably need a lawyer to set this up. But that’s all I know.
Permanent Life Insurance Policy: I think this lives inside a trust and you fund it with your assets and somehow you can pass it on to you kids tax free. Probably a lawyer thing too.
Kids: I don’t have kids. With nieces and nephews, how do I set them up for success? 529 Account? Is that still a good investment. Is college going to be relevant 20 years from now? I read today that Palantir is hiring kids straight out of high school. I hear about parents putting their kids “on salary” so the parents have another tax write-off and their kids can start an investment account before they are 18.
I don’t know anything about wills or estate planning or how health insurance works in retirement or how to borrow against your assets.
Dumb things I spend my money on:
URLs: I sold one url like 10 years ago for $600, and somehow I think it’s a good investment strategy. I only buy ones that I have a project idea around. A lot of maybe/one-days. Last week I bought chadwick.love Not sure what it will be yet, but one day, maybe.
$4.99 digital movies: this one has started to lapse. Probably because I’ve bought all the movies I could ever want. I just know I could cancel all my streaming services and still have my babies. Over 600 of them at last count.
Tattoo Fund: this is literal cash I hide in a book on my shelf. When I find extra cash, I put it there. When I get enough money, I go get one of those dumb tattoos you see on my body.
Lottery: Nevada doesn’t have the lottery, so this one is pretty minor. But I like for $2, I get a day of daydreaming out of it.
And a bunch of ridiculous things that I think will make my life better. Think TikTok shop. The last rando was those KrazyKlean toilet water softener things. “They last 10 years.” I’ll let you know later if they work.
Things I should spend my money on, but don’t:
Dentist. I dare you to find a picture of me smiling with my teeth. My face doesn’t even move that way anymore. Plus I always end up at dentist offices where I can tell half of what they are charging me is going to their rent. That chandelier doesn’t make my teeth straighter.
All that said, the greatest financial investment I ever made was getting a library card. Endless possibilities of education and information, for free.
Personal finance isn’t a competition. We’re all stuck in this capitalistic hellhole together. I don’t know why we don’t talk more about how we are all handling it.
How are you handling yours?